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Instant Gratification, Multiple Selves, & Self-Control: How to Control Your Selves David Laibson Harvard University November 2010.

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Presentation on theme: "Instant Gratification, Multiple Selves, & Self-Control: How to Control Your Selves David Laibson Harvard University November 2010."— Presentation transcript:

1 Instant Gratification, Multiple Selves, & Self-Control: How to Control Your Selves David Laibson Harvard University November 2010

2 1. Motivating Experiments A Thought Experiment Would you like to have A)15 minute massage now or B) 20 minute massage in an hour Would you like to have C) 15 minute massage in a week or D) 20 minute massage in a week and an hour

3 Read and van Leeuwen (1998) Time Choosing TodayEating Next Week If you were deciding today, would you choose fruit or chocolate for next week?

4 Patient choices for the future: Time Choosing TodayEating Next Week Today, subjects typically choose fruit for next week. 74% choose fruit

5 Impatient choices for today: Time Choosing and Eating Simultaneously If you were deciding today, would you choose fruit or chocolate for today?

6 Time Inconsistent Preferences: Time Choosing and Eating Simultaneously 70% choose chocolate

7 Read, Loewenstein & Kalyanaraman (1999) Choose among 24 movie videos Some are low brow: Four Weddings and a Funeral Some are high brow: Schindlers List Picking for tonight: 66% of subjects choose low brow. Picking for next Thursday: 37% choose low brow. Picking for second Thursday: 29% choose low brow. Tonight I want to have fun… next week I want things that are good for me.

8 Extremely thirsty subjects McClure, Ericson, Laibson, Loewenstein and Cohen (2007) Choosing between, juice now or 2x juice in 5 minutes 60% of subjects choose first option. Choosing between juice in 20 minutes or 2x juice in 25 minutes 30% of subjects choose first option. We estimate that the 5-minute discount rate is 50% and the long-run discount rate is 0%. Ramsey (1930s), Strotz (1950s), Herrnstein (1960s), and Ainslie (1970s) were the first to understand that discount rates are higher in the short run than in the long run.

9 Conceptual Outline People are not internally consistent decision-makers Internal conflicts can be modeled and measured Early understanding of the neural foundations Scalable, inexpensive policies can transform behavior

10 Outline 1.Motivating experimental evidence 2.Theoretical framework 3.Empirical evidence 4.Neuroscience foundations 5.Neuroimaging evidence 6. Policy analysis

11 2. Theoretical Framework Classical functional form: exponential functions. D(t) = t D(t) = 1, U t = u t + u t+1 u t+2 u t+3 But exponential function does not show instant gratification effect. Discount function declines at a constant rate. Discount function does not decline more quickly in the short-run than in the long-run.

12 Constant rate of decline -D'(t)/D(t) = rate of decline of a discount function 1 year2 years 3 years4 years5 years Now

13 Rapid rate of decline in short run Slow rate of decline in long run 1 year2 years 3 years4 years5 years Now

14 An exponential discounting paradox. Suppose people discount at least 1% between today and tomorrow. Suppose their discount functions were exponential. Then 100 utils in t years are worth 100*e (-0.01)*365*t utils today. What is 100 today worth today? What is 100 in a year worth today? 2.55 What is 100 in two years worth today? 0.07 What is 100 in three years worth today? 0.00

15 An Alternative Functional Form Quasi-hyperbolic discounting (Phelps and Pollak 1968, Laibson 1997) U t = u t + u t+1 u t+2 u t+3 Exponential U t = u t + u t+1 u t+2 u t+3 Quasi-hyperbolic evenly discounts all future periods. exponentially discounts all future periods. For continuous time: see Barro (2001), Luttmer and Marriotti (2003), and Harris and Laibson (2009)

16 Building intuition To build intuition, assume that = ½ and = 1. Discounted utility function becomes U t = u t + ½ u t+1 u t+2 u t+3 Discounted utility from the perspective of time t+1. U t+1 = u t+1 + ½ u t+2 u t+3 Discount function reflects dynamic inconsistency: preferences held at date t do not agree with preferences held at date t+1.

17 Application to massages = ½ and = 1 A 15 minutes now B 20 minutes in 1 hour C 15 minutes in 1 week D 20 minutes in 1 week plus 1 hour NPV in current minutes 15 minutes now 10 minutes now 7.5 minutes now 10 minutes now

18 Application to massages = ½ and = 1 A 15 minutes now B 20 minutes in 1 hour C 15 minutes in 1 week D 20 minutes in 1 week plus 1 hour NPV in current minutes 15 minutes now 10 minutes now 7.5 minutes now 10 minutes now

19 Exercise Assume that = ½ and = 1. Suppose exercise (current effort 6) generates delayed benefits (health improvement 8). Will you exercise? Exercise Today: -6 + ½ [8] = -2 Exercise Tomorrow: 0 + ½ [-6 + 8] = +1 Agent would like to relax today and exercise tomorrow. Agent wont follow through without commitment.

20 Self-regulation Reduce cost of investment: -6 becomes -1 –walk to work –stand instead of sitting at a seminar –conduct walking office hours Mix in immediate pleasures: -6 becomes -6+5=-1 –watch low-brow movies on your treadmill Commitment: creating binding plans –make a weight-loss bet with co-workers (cf AA, NA) –remove unhealthy foods from house (icecream, cookies) –get a personal trainer –exercise with friends (see you at 8 AM on the courts) –sign up for a regular exercise class –form study groups (well meet at 10 AM on Saturday morning) –agree to give a paper that you havent finished

21 Commitment is an old idea Ulysses and the Sirens, Herbert James Draper Wax-filled ears Bound to mast

22 Evidence from the field

23 Choi, Laibson, Madrian, Metrick (2002) Self-reports about undersaving. Survey mailed to employees of US firm Matched to administrative data on actual savings behavior

24 24 Typical breakdown among 100 employees Out of every 100 surveyed employees 68 self-report saving too little 24 plan to raise savings rate in next 2 months 3 actually follow through over the next four months

25 Laibson, Repetto, and Tobacman (2010) Use MSM to estimate discounting parameters: –Substantial illiquid retirement wealth: W/Y = 3.9. –Extensive credit card borrowing: 68% didnt pay their credit card in full last month Average credit card interest rate is 14% Credit card debt averages 13% of annual income –Consumption-income comovement: Marginal Propensity to Consume = 0.23 (i.e. consumption tracks income)

26 LRT Simulation Model Stochastic Income Lifecycle variation in labor supply (e.g. retirement) Social Security system Life-cycle variation in household dependents Bequests Illiquid asset Liquid asset Credit card debt Numerical solution (backwards induction) of 90 period lifecycle problem.

27 LRT Results: U t = u t + u t+1 u t+2 u t+3 = 0.70 (s.e. 0.11) = 0.96 (s.e. 0.01) Null hypothesis of = 1 rejected (t-stat of 3). Specification test accepted. Moments: Empirical Simulated (Hyperbolic) %Visa: 68%63% Visa/Y: 13%17% MPC: 23%31% f(W/Y):

28 LRT Intuition Long run discount rate is –ln( ) = 4%, so save in long-run (illiquid) assets. Short-run discount rate is –ln( 40%, so borrow on your credit card today. Indeed, you might even borrow on your credit card so you can afford to save in your 401(k) account.

29 Dellavigna and Malmendier (2004, 2006) Average cost of gym membership: $75 per month Average number of visits: 4 Average cost per vist: $19 Cost of pay per visit: $10

30 Shapiro (2005) For food stamp recipients, caloric intake declines by 10-15% over the food stamp month. To be resolved with exponential discounting, requires an annual discount rate of 77% Survey evidence reveals rising desperation over the course of the food stamp month, suggesting that costless intertemporal substitution is not a likely explanation Households with more short-run impatience (estimated from hypothetical intertemporal choices) are more likely to run out of food sometime during the month.

31 The data can reject a number of alternative hypotheses. Households that shop for food more frequently do not display a smaller decline in intake over the month, casting doubt on depreciation stories. Individuals in single-person households experience no less of a decline in caloric intake over the month than individuals in multi-person households. Survey respondents are not more likely to eat in another persons home toward the end of the month. The data show no evidence of learning over time

32 Willingness to pick up HIV test results: Thornton (2008) Immediate dollar reward for picking up results

33 Small immediate costs: Thornton (2005) Randomized distance (miles) to pick up info Fraction picking up info on HIV status

34 Other papers: Oster and Scott-Morton (2004) –People sold on the news stand at a high price relative to subscription –Foreign Affairs sold on the news stand at a low price relative to subscription –But People is sold disproportionately on the news stand and Foreign Affairs is sold disproportionately by subscription. Wertenbroch (1998): consumers buy temptation goods in small packages, foregoing volume discounts.

35 Evidence for Commitment

36 Ariely and Wertenbroch (2002) Several proofreading tasks: Sexual identity is intrinsically impossible," says Foucault; however, according to de Selby[1], it is not so much sexual identity that is intrinsically impossible, but rather the dialectic, and some would say the satsis, of sexual identity. Thus, D'Erlette[2] holds that we have to choose between premodern dialectic theory and subcultural feminism imputing the role of the observor as poet. Three arms in study: Evenly spaced deadlines ($20) Self-imposed deadlines ($13) –subjects in this condition could self-impose costly deadlines ($1 penalty for each day of delay) and 37/51 do so. End deadline ($5)

37 Kaur, Kremer, and Mullainathan (2010): Compare two piece-rate contracts: 1.Linear piece-rate contract (Control contract) –Earn w per unit produced 2.Linear piece-rate contract with penalty if worker does not achieve production target T (Commitment contract) –Earn w/2 for each unit produced if production < T –Jump up at T (jump is T*w/2) –Thereafter, earn w for each unit produced if production T, earn T Earnings Production Never earn more under commitment contract May earn much less

38 Kaur, Kremer, and Mullainathan (2009): Demand for Commitment (non-paydays) –Commitment contract (Target>0) chosen 39% of the time –Workers are 11 percentage points more likely to choose commitment contract the evening before Effect on Production (non-paydays) –Being offered contract choice increases average production by 5 percentage points relative to control –Implies 13 percentage point productivity increase for those that actually take up commitment contract –No effects on quality of output (accuracy) Payday Effects (behavior on paydays) –Workers 21 percentage points more likely to choose commitment (Target>0) morning of payday –Production is 5 percentage points higher on paydays

39 Ashraf, Karlan, and Yin (2006) Offered a commitment savings product to randomly chosen clients of a Philippine bank 28.4% take-up rate of commitment product More hyperbolic subjects were more likely to take up the product After twelve months, average savings balances increased by 81% for those clients assigned to the treatment group relative to those assigned to the control group.

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41 Gine, Karlan, Zinman (2009) Tested a voluntary commitment product (CARES) for smoking cessation. Smokers offered a savings account in which they deposit funds for six months, after which take urine tests for nicotine and cotinine. If they pass, money is returned; otherwise, forfeited 11% of smokers offered CARES take it up, and smokers randomly offered CARES were 3 percentage points more likely to pass the 6-month test than the control group Effect persisted in surprise tests at 12 months.

42 Other studies Della Vigna and Paserman (2005): job search Duflo (2009): immunization Duflo, Kremer, Robinson (2009): commitment fertilizer Meier and Sprenger (2010): correlation with credit card borrow Milkman et al (2008): video rentals return sequencing Oster and Scott-Morton (2005): magazine marketing/sales Sapienza and Zingales (2008,2009): procrastination Shui and Ausubel (2006): credit cards Trope & Fischbach (2000): commitment to medical adherence Wertenbroch (1998): individual packaging

43 Some other field evidence Ashraf and Karlan (2004): commitment savings Della Vigna and Paserman (2005): job search Duflo (2009): immunization Duflo, Kremer, Robinson (2009): commitment fertilizer Karlan and Zinman (2009): commitment to stop smoking Milkman et al (2008): video rentals return sequencing Oster and Scott-Morton (2005): magazine marketing/sales Sapienza and Zingales (2008,2009): procrastination Thornton (2005): HIV testing Trope & Fischbach (2000): commitment to medical adherence Wertenbroch (1998): individual packaging

44 4. Neuroscience Foundations What is the underlying mechanism? Why are our preferences inconsistent? Is it adaptive? How should it be modeled? Does it arise from a single time preference mechanism (e.g., Herrnsteins reward per unit time)? Or is it the resulting of multiple systems interacting (Shefrin and Thaler 1981, Bernheim and Rangel 2004, ODonoghue and Loewenstein 2004, Fudenberg and Levine 2004)?

45 Shiv and Fedorikhin (1999) Cognitive burden/load is manipulated by having subjects keep a 2-digit or 7-digit number in mind as they walk from one room to another On the way, subjects are given a choice between a piece of cake or a fruit-salad Processing burden% choosing cake Low (remember only 2 digits)41% High (remember 7 digits)63%

46 Mesolimbic dopamine reward system Frontal cortex Parietal cortex Affective vs. Analytic Cognition mPFC mOFC vmPFC

47 Hypothesize that the fronto-parietal system is patient Hypothesize that mesolimbic system is impatient. Then integrated preferences are quasi-hyperbolic Relationship to quasi-hyperbolic model nowt+1t+2t+3 PFC1111… Mesolimbic1000… Total2111… Total normed11/2 …

48 Relationship to quasi-hyperbolic model Hypothesize that the fronto-parietal system is patient Hypothesize that mesolimbic system is impatient. Then integrated preferences are quasi-hyperbolic U t = u t + u t+1 u t+2 u t+3 (1/ )U t = (1/ )u t + u t+1 u t+2 u t+3 (1/ )U t =(1/ )u t + [ u t + u t+1 u t+2 u t+3 limbic fronto-parietal cortex

49 Hypothesis: Limbic system discounts reward at a higher rate than does the prefrontal cortex. time discount value prefrontal cortex mesolimbic system

50 5. Neuroimaging Evidence McClure, Laibson, Loewenstein, and Cohen (2004) Do agents think differently about immediate rewards and delayed rewards? Does immediacy have a special emotional drive/reward component? Does emotional (mesolimbic) brain discount delayed rewards more rapidly than the analytic (fronto-parietal cortex) brain?

51 Choices involving Amazon gift certificates: delay d>0 d Reward R R Hypothesis: fronto-parietal cortex. delay d=0 d Reward R R Hypothesis: fronto-parietal cortex and limbic. Time

52 Emotional system responds only to immediate rewards y = 8mmx = -4mmz = -4mm 0 7 T 13 Earliest reward available today Earliest reward available in 2 weeks Earliest reward available in 1 month VStr MOFCMPFC PCC Neural activity Seconds McClure, Laibson, Loewenstein, and Cohen (2004) 0.4% 2s

53 x = 44mm x = 0mm 0 15 T 13 VCtx 0.4% 2s RPar DLPFCVLPFCLOFC Analytic brain responds equally to all rewards PMA Earliest reward available in 2 weeks Earliest reward available in 1 month Earliest reward available today

54 Choose Smaller Immediate Reward Choose Larger Delayed Reward Emotional System Frontal system Brain Activity Brain Activity in the Frontal System and Emotional System Predict Behavior (Data for choices with an immediate option.)

55 Conclusions of Amazon study Time discounting results from the combined influence of two neural systems: Mesolimbic dopamine system is impatient. Fronto-parietal system is patient. These two systems are separately implicated in emotional and analytic brain processes. When subjects select delayed rewards over immediately available alternatives, analytic cortical areas show enhanced changes in activity.

56 Open questions Experiment on primary rewards: Juice McClure, Ericson, Laibson, Loewenstein, Cohen (Journal of Neuroscience, 2007) 1.What is now and what is later? Our immediate option (Amazon gift certificate) did not generate immediate consumption. Also, we did not control the time of consumption. 2.How does the limbic signal decay as rewards are delayed? 3.Would our results replicate with a different reward domain? 4.Would our results replicate over a different time horizon?

57 Subjects water deprived for 3hr prior to experiment (subject scheduled for 6:00) From: Subject: I hate you To: Cc: Im already thirsty! Its 4:00!

58 Free (10s max.)2sFree (1.5s Max) Variable Duration 15s (i) Decision Period(ii) Choice Made(iii) Pause(iv) Reward Delivery 15s10s5s iv. Juice/Water squirt (1s ) … Time iiiiii A B Figure 1

59 d d'-d (R,R') { This minute, 10 minutes, 20 minutes } { 1 minute, 5 minutes } {(1ml, 2ml), (1ml, 3ml), (2ml, 3ml)} Experiment Design d = This minute d'-d = 5 minutes (R,R') = (2ml, 3ml)

60 This minute 10 minutes 20 Minutes P(choose early) Delay to early reward (d) Behavioral evidence for non-exponential discounting

61 This minute 10 minutes 20 Minutes P(choose early) d-d = 5 min d-d = 1 min Delay to early reward (d) Behavioral evidence for non-exponential discounting This minute 10 minutes 20 minutes Delay to early reward (d)

62 Discount functions fit to behavioral data LimbicCortical β = 0.53 (se = 0.041) δ = 0.98 (se = 0.014) = 0.47 (se = 0.101) = 1.02 (se = 0.018) Evidence for two-system model Can reject restriction to a single exponential: t-stat > 5 Double exponential generalization fits data best

63 Figure 4 x = -12mmx = -2mmx = -8mm z = -10mm NAcc MOFC/SGC ACCPCu PCC NAcc ACC SGC PCu x = 0mm x = 40mmx = -48mm PCC SMA/PMA Vis Ctx PPar BA10 Ant Ins BA9/44 BA T Areas that respond primarily to immediate rewards Areas that show little discounting Neuroimaging data

64 Figure 5 x = 0mmx = -48mm x = 0mmy = 8mm Juice only Amazon only Both Patient areas (p<0.001) Impatient areas (p<0.001) x = 0mmx = -48mmx = -4mmy = 12mm Patient areas (p<0.01) Impatient areas (p<0.01) Comparison with Amazon experiment:

65 Measuring discount functions using neuroimaging data Impatient voxels are in the emotional (mesolimbic) reward system Patient voxels are in the analytic (prefrontal and parietal) cortex Average (exponential) discount rate in the impatient regions is 4% per minute. Average (exponential) discount rate in the patient regions is 1% per minute.

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68 Hare, Camerer, and Rangel (2009) + 4s food item presentation ?-?s fixation Rate Health + Rate Taste + Decide Health SessionTaste SessionDecision Session

69 Rating Details Taste and health ratings made on five point scale: -2,-1,0,1,2 Decisions also reported on a five point scale: SN,N,0,Y,SY strong no to strong yes

70 What is self-control? Rejecting a good tasting food that is not healthy Accepting a bad tasting food that is healthy

71 Subjects SC (self-control) group = 19 dieting subjects who showed self-control during the decision phase NSC (no self-control) group = 18 comparison subjects who did not exhibit self-control during the decision phase

72 Who is classified as a self- controller: SC? (must meet all criteria below) 1)Use self-control on > %50 of trials in which self-control is required (decline Liked- Unhealthy items or choose Disliked-Healthy ones) 2)Decision = 1 HR + 2 LR + 1 > 2 3)R 2 for HR > R 2 for LR

73 Examples of individual behavioral fits Self-controller Non- self-controller

74 Disliked Healthy Disliked Unhealthy Liked Unhealthy Liked Healthy Percent Yes Result: NSC group chose based on taste

75 ** Disliked Healthy Disliked Unhealthy Liked Unhealthy Liked Healthy Percent Yes Result: SC group chose based on taste and health

76 ** Disliked Healthy Disliked Unhealthy Liked Unhealthy Liked Healthy Percent Yes SC group versus NSC group

77 Question: Is there evidence for a single valuation system? Neuroimaging Results

78 Activity in vmPFC is correlated with a behavioral measure of decision value (regardless of SC) L p <.001 p <.005

79 * * * Taste RatingHealth Rating Beta vmPFC BOLD signal reflects both taste and health ratings

80 BOLD Health Rating Beta Decision Health Rating Beta The effect of Health Rating in the vmPFC is correlated with its effect on behavior Robust reg Coef =.847

81 Neuroimaging Results Question: Does self-control involve DLPFC modulation of the vmPFC valuation network?

82 More activity in DLPFC in trials with successful self control than in trials with unsuccessful self-control L p <.001 p <.005

83 Figner, Knoch, Johnson, Krosch, Lisanby, Fehr and Weber (2010) Disruption of left lateral prefrontal cortex (LPFC) with repetitive transcranial magnetic stimulation (rTMS) increases choice of immediate rewards over larger delayed rewards. rTMS did not change choices involving only delayed rewards or valuation judgments of immediate and delayed rewards. Causal evidence for a neural lateral-prefrontal cortex–based self-control mechanism in intertemporal choice.

84 Albrecht, Volz, Sutter, Laibson, and von Cramon (2010) An immediate reward in a choice set elevates activation of the ventral striatum, pregenual anterior cingulate cortex and anterior medial prefrontal cortex. These dopaminergic reward areas are also responsive to the identity of the recipient of the reward. Even an immediate reward does not activate these dopaminergic regions when the decision is being made for another person. Results imply that participants show less affective engagement (i) when they are making choices for themselves that only involve options in the future or (ii) when they are making choices for someone else. Also find that behavioral choices reflect more patience when choosing for someone else.

85 Summary of neuroimaging evidence One system associated with midbrain dopamine neurons (mesolimbic dopamine system) discounts at a high rate. Second system associated with lateral prefrontal and posterior parietal cortex responsible for self- regulation (shows relatively little discounting) Combined function of these two systems accounts for decision making across choice domains, including non-exponential discounting regularities.

86 Outline 1.Experimental evidence for dynamic inconsistency. 2.Theoretical framework: quasi-hyperbolic discounting. 3.Field evidence: dynamic decisions. 4.Neuroscience: –Mesolimbic Dopamine System (emotional, impatient) –Fronto-Parietal Cortex (analytic, patient) 5.Neuroimaging evidence –Study 1: Amazon gift certificates –Study 2: juice squirts –Study 3: choice of snack foods –Study 4: rTMS –Study 5: intertemporal choices for others 6. Policy

87 Opt-in 401(k) enrollment UNDESIRED BEHAVIOR: Non-participation DESIRED BEHAVIOR: participation PROCRASTINATION Opt-out enrollment (auto-enrollment) START HERE

88 6. Policy Defaults in the savings domain Welcome to the company If you dont do anything – You are automatically enrolled in the 401(k) – You save 2% of your pay – Your contributions go into a default fund Call this phone number to opt out of enrollment or change your investment allocations

89 Madrian and Shea (2001) Choi, Laibson, Madrian, Metrick (2004) Opt-out enrollment Opt-in enrollment

90 Employees enrolled under automatic enrollment cluster at default contribution rate. Fraction of Participants at different contribution rates: Default contribution rate under automatic enrollment

91 Participants stay at the automatic enrollment defaults for a long time. Fraction of Participants Hired Under Automatic Enrollment who are still at both Default Contribution Rate and Asset Allocation Company B Company C Company D Fraction of Participants Tenure at Company (Months)

92 Survey given to workers who were subject to automatic enrollment: You are glad your company offers automatic enrollment. Agree? Disagree? Enrolled employees: 98% agree Non-enrolled employees:79% agree All employees:97% agree Do people like a little paternalism? Source: Harris Interactive Inc.

93 Active Choice UNDESIRED BEHAVIOR: Non-participation DESIRED BEHAVIOR: participation PROCRASTINATION START HERE Must choose for oneself

94 The power of deadlines: Active decisions Carroll, Choi, Laibson, Madrian, Metrick (2009) Active decision mechanisms require employees to make an active choice about 401(k) participation. Welcome to the company You are required to submit this form within 30 days of hire, regardless of your 401(k) participation choice If you dont want to participate, indicate that decision If you want to participate, indicate your contribution rate and asset allocation Being passive is not an option

95 Active Choice Cohort Opt-in cohort Carroll, Choi, Laibson, Madrian, Metrick (2009)

96 UNDESIRED BEHAVIOR: Non-participation DESIRED BEHAVIOR: participation PROCRASTINATION Quick enrollment START HERE

97 UNDESIRED BEHAVIOR: Non-participation DESIRED BEHAVIOR: participation PROCRASTINATION Quick enrollment START HERE

98 Simplified enrollment raises participation Beshears, Choi, Laibson, Madrian (2008)

99 99 Improving participation in 401K plans (for a typical firm) Default non-enrollment (financial incentives alone) 40% Quick Enrollment (check a box) 50% Active choice (perceived reqt to choose) 70% Default enrollment (opt out) 90% Participation Rate (1 year of tenure)

100 Use automaticity and deadlines to nudge people to make better health decisions One early example: Home delivery of chronic meds (e.g. maintenance drugs for diabetes and CVD) Pharmaceutical adherence is about 50% One problem: need to pick up your meds Idea: use active decision intervention to encourage workers on chronic meds to consider home delivery Early results: HD take up rises from 15% to 50% Cost savings during first six months: $4 million Long-run health improvement? Extensions to health domain

101 The science of self-regulation Can we design new methods for self-regulation? Can we improve the menu of options for commitment?

102 What kind of commitment do people want? Beshears, Choi, Laibson, Madrian, Sakong (2010) Give subjects a budget ($50, $100, or $500) and ask them to allocate between: –Freedom account (22% interest) –Commitment account (22% interest): restrictions on withdrawal before self-selected goal date, about 100 days in the future Economically speaking, the Freedom account dominates the Commitment account (Freedom account has greater liquidity)

103 Proportion invested in commitment account Beshears, Choi, Laibson, Madrian, Sakong (2010)

104 Outline 1.Motivating experimental evidence 2.Theoretical framework 3.Field evidence 4.Neuroscience foundations 5.Neuroimaging evidence 6.Policy discussion Defaults Deadlines Simplicity New tools for self-regulation and commitment A copy of these slides is available on my website.


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